Concluding a loan agreement is one of the simplest loan operations. The lender defines the subject or amount of money that he decides to transfer to the borrower. The contract also includes a declared repayment date, within which the customer should pay the entire amount due. It is good to know what elements this contract consists of and what aspects we should pay special attention to before signing.
What additional costs are borne by the borrower?
A free loan can be made between private individuals. If we incur liabilities in a bank or loan company, we will be obliged to refund a higher amount. It is worth studying the contract carefully to find out what amount should be paid back. The cost of the liability includes nominal interest, as well as non-interest costs such as: commission, handling fees, insurance. Actual Annual Interest Rate informs us about the sum of all costs before signing the contract.
Date and form of repayment
The loan may be granted without indicating the repayment date. However, this is very bad for the customer. In such a situation, the lender may require repayment at any time during the term of the contract. For this reason, the loan agreement signed with the company or bank will contain a specific date and method of repayment (number of installments and their amount). The customer should pay attention to the conditions of early repayment. In this way, we can save on additional costs, as long as the lender has not stipulated in the conditions that repayment ahead of schedule is payable.
Important information in the loan agreement
When reading the loan agreement, it is also worth looking at the sections dealing with complaints and termination of the contract. The first informs that the customer has the right to give up the service without giving a reason within 14 days without incurring additional costs. In turn, the termination of the contract determines the lender’s right to withdraw from the transaction. This option is available when the customer has provided false information, has attempted to extort a loan, or if there are significant indications of the borrower’s financial problems.